About a year after Microsoft CEO Satya Nadella became the third chief executive officer in the company’s history, he outlined in April 2015 what seemed at the time an audacious goal: to achieve $20 billion in cloud-related revenue across Microsoft’s array of products and services by the end of its 2018 fiscal year. At the GeekWire Summit Wednesday, Nadella reiterated that the real goal behind setting that target was to change perceptions of Microsoft’s cloud competition both internally and externally.
“One of the key things that we felt we needed to make clear, frankly both internally and externally, is, ‘what’s the trend that we are really capitalizing on, and how are we winning in that space,'” Nadella said.
Before Nadella became CEO, Microsoft sent a lot of mixed signals about its commitment and strategy toward cloud computing. It launched Azure and Office 365 as cloud services, but continued to emphasize Windows software as the single-most important product in its orbit. Meanwhile, Amazon Web Services was expanding its lead in infrastructure cloud computing and companies like Salesforce were becoming synonymous with enterprise software delivered as a service.
“The reality was most people … viewed our cloud narrowly as viewing our competition with AWS,” Nadella said. “That’s one space. But if you really look at our cloud, we have SaaS applications with Office 365, we have business apps with Dynamics 365. we have Azure… We had to make sure it was clear both internally and externally that we would have a big business here.”
Two years later, as it enters its 2018 fiscal year, Microsoft announced in July that it was on a $18.9 billion run rate for cloud revenue. The company could hit the $20 billion run-rate target when it reports earnings later this month, and barring disaster it seems certain to reach Nadella’s goal over the course of the next year. And Microsoft’s stock has almost doubled over that period.
“It’s our ability to walk that walk, quarter after quarter, that’s really helped the Street in some sense say, ‘you know what, here’s a management team, here’s a company that can really follow through,'” he said Wednesday.
